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Quo vadis, sole practitioner?

Quo Vadis, Sole Practitioner?

There have been many funerals conducted for the sole practitioner and for small practices in general, but so far there have been very few burials. The sole practitioner is, evidently, a hardier breed than expected in some quarters.

At one point, computers were going to get us because they were the future and only the big boys could cope with them. A little later the big boys themselves were going to eat us alive by expanding into the small client market. More recently we are supposed to succumb to the age of specialization since we are deemed too small to provide the now needed broad range of services to our clients. In fact, we are advised to seek niches in the market so that we can hide in them and maybe eke out a living where the pickings are too thin to attract larger, more capable firms. You can believe it if you wish to!

If you'd rather believe something else, all that is needed is a look at the facts. First, as economists seem to remember more often than politicians, there are a lot more small business than large ones. Thanks mainly to the complexity of taxation, most of them need professional help. And the fond beliefs of their employees and many politicians to the contrary notwithstanding, the majority of them are just squeaking by rather than piling up loot and hiding it from the government. For this simple reason they cannot pay a great deal for the help they need; also for this reason they need the help more than those with greater margins who are hurt less if they overpay taxes. There is little question that the sole practitioner with low overhead can present a more acceptable bill to these clients than can a larger firm.

Service is another area where the small practice has an edge if it wants to. A small client calling a larger firm usually deals with junior, relatively inexperienced help who too often think they are too small to merit much attention. Calling a sole practitioner produces an experienced, usually senior professional to whom the client is relatively much more important.

Finally, the profession itself is structured such that it must have many small practice units. These are necessary because too many accountants do not remain with the firms that first hire them and industry can't soak up the overflow and because the profession cannot afford to appear to be uninterested in serving the numerous little guys. They may not be organized, but they vote.

While these facts are properly comforting when the prophets are crying doom and the larger professional organizations appear to be ignoring us, they should not be used to justify poor service, poor quality or failure to keep current with the profession. The facts provide small practices a place, but it is certainly not guaranteed. Accounting is increasingly a profession which must follow the Red Queen's advice to Alice and run faster and faster if any progress is to be made. It is true that our clients need help, but they aren't likely to continue seeking it from practitioners who appear to be static in changing times.

Since the large firms have not absorbed our clients and computers have been a liberating force rather than a threat, how are we to look at the information explosion? Unfortunately, (since it's a lot of work) as a challenging opportunity. As a tax pro you can't really compete with the head of the tax department at a large firm, but then you never could before either. Generally, your clients don't need you to. And today you can dial into the finest tax libraries from your office modem while producing very complex returns very effectively by computer.

What it comes to is this: the sole practitioner has always been a generalist. We were serving our clients' personal financial planning needs, doing MAS work, handling small audits, testifying in divorces, helping with income and estate taxes and a raft of other services before anybody decided these were specialties. We can still do that today because our clients usually don't need a specialist's level of knowledge and because both our tools and our access to information have vastly improved. We have to know when we are about to swim out of our depth, but that isn't new; it has always been true of any professional. What it really comes down to is that unbundling services should increase our income by legitimizing billing for things clients once tended to take for granted.

Let those who will find their niche; that's not new either. The small client needs a knowlegeable general practitioner to replace the staff he can't afford, and that need seems to be growing. To paraphrase Pogo, "We have met the enemy and he isn't us."

Jack W. Curtis, CPA, has been in public practice since 1970 in Granada Hills, California. He received his bachelors degree from Loyola University in Los Angeles, California, and his MS from the University of Southern California. He is a member of NSPA, AICPA, NAEA and IAFP.
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Title Annotation:sole practitioner accountant
Author:Curtis, Jack W.
Publication:The National Public Accountant
Date:Nov 1, 1990
Words:852
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